Italy's Mediaset Sees First Quarter Profits Tumble
The Silvio Berlusconi-controlled company suffered big losses but is staying the course.
ROME – Italian broadcast and cinema giant Mediaset saw first quarter profits free fall 85 percent in the first quarter, on the back of weak ad sales and felling pay-TV revenue, but it said it stuck by its guidance for all of 2012.
The company, which is controlled by former Italian Prime Minister Silvio Berlusconi, said Tuesday that the country’s weak economy was the main culprit behind its poor performance. The company, Italy’s largest private broadcaster, is also fighting off an increasingly strong challenge from News Corp. subsidiary Sky Italia.
In a conference call Tuesday, Mediaset said ad sales dropped 10 percent in the first quarter compared to the year-ago period, reaching €623 million ($810 million). Net profit was just €103 million ($134 million), down a staggering 85 percent year on year.
The news was released after the close of the market, but shares dipped 2.6% in heavy trading earlier in the day to finish the day at €1.638 ($2.18), near their lowest point in the company’s 16-year history as a publically traded entity. In after hours trading on secondary markets, shares fell an additional 1.1 percent.
The company reiterated guidance that it expected 2012 profits and revenue to finish the year “clearly” below 2011 levels, implying a recovery, at least in relative terms, over the last nine months of the year.
The company, which owns three television networks and a major film production and distribution company, is in the midst of a three-year €250 million ($325 million) cost cutting plan that was kicked off by reducing the company dividend by half last year.